Over the last year we’ve seen developers scrambling to find “value add” features to new game purchases. Their goal is to convince the customer to buy new instead of used because developers don’t see a penny from a used game sale. While GameStop sees 48% profit margins from the used game market developers struggle to stay floating in the industry.
This is not the fault of GameStop and their 48% profit margins because they’re only getting 7% to 20% profit margins (say analysts) on new game sales. As someone that’s run a game store online, if you’re getting 15%+ on a new game you’ve got some great hookups in the distribution channel or are buying in huge quantities.
Buying games in huge quantities to build profit margins can be a huge mistake in this industry. Gamers are fickle little creatures and they’re going to buy their top tier games for a few weeks and then sales will drop significantly. No retail chain wants to purchase a thousand copies of GTA IV (only as an example) and sell seven hundred over the first few week to be stuck holding onto a few hundred copies when the dust settles. Now you’ll have to put them on sale to get them out of the store because the hardcore gamer have already done their shopping and you’re not going to get any price protection if you’re not a major player in the industry.
Why take 7% profit margins when you can get 48% on a used game? The gamers don’t seem to mind because they’ll trade in a used copy of a sports title like Madden to save $5.00 on the latest franchise release. Gamers will buy Fable 2, beat it in a week and rush to the store to get the “most for their dollar” before the game gets stale and buy-back prices drop like a stone. Why not rent Fable 2 and save yourself $50.00? Of course, renting pisses off developers as well because they see no additional revenue.
While the economy struggles and consumers fight for their jobs, the entertainment side of life continues to grow. People would rather “cocoon” in their homes playing video games and watching movies on their brand new HD television because it takes them away from the low points of the economy if only for a few hours. History has shown us trends in entertainment during the down points of economies, it’s natural to want to get away for a bit.
But, consumers want to play these games on the cheap because their job may not be there tomorrow. Saving $5.00 knowing the store just took the title in for half the price doesn’t bother you; $5.00 in your pocket is better than in their pocket right? The fact that they just pocketed upward of 40% on the game doesn’t matter to you — it’s all about your bottom line!
While we’re bargain hunting during the recession developers are going to try and up sell you to a new copy of the game. If that means giving you special game items and features with a “one time code” upon purchase, it will be up to you to decide if it’s valuable. All the while GameStop will lock out the game industry from selling used games because 42% of their overall gross profit is from used game sales.
You, the consumer, benefits from a slightly cheaper game, bargain bin fire sales and additional game features if you do choose to buy new. The economic down turn is a great time to be a gamer, as long as you remain employed.
Sorry Paul, I just don’t do hate.
Jordan, your description of Rage reminds me of how I felt after finishing Doom 3. Not a bad game, but I wouldn’t pay 60 USD for it.
@Resident Evil 6 on-disc DLC unlocked by modders
Bwa ha ha ha ha :))
Way to go modders! As far as I am concerned, the contents id already free (if you bough the game).
Dan, interesting point there, it could be something to be unlocked.
@World of Warcraft cities laid waste by first level priest
What makes it funny is that Blizzard is now going after the hacker. Jeez, why not invest the time in finding other such bugs and patch those as well? Talk about the wrong way to spend time and energy.
@QOTW: None, unfortunately. I had very little time to play any game in the first half of the year, I doubt I’ll have more in the fall or winter. Heck, I still have Shadowrun to finish, Portal 2, the Penumbra games and so on.
I might pick up a game or two if there’s a sale on Steam – maybe Company of Heroes or Metro 2033, but again, no new game, and with very little chance of playing them these months.
@Cheating AI: Red Alert was also cheating.
And yes, Quake 3 bots were able to accurately figure out the velocity vector of the player in order to lead their rockets (cheating). True. But you could also change your direction after the rocket was shot. And in the mean time, you would have to place your own rockets close enough to frag them. That’s the challenge, beat a cheating computer.
Turns out the Resident Evil 6 DLC is free after all. The next DLC will probably unlock the rest of the copntent on the disc.
@Sony sues Kevin Butler actor for appearing in Wii commercial: In my opinion they are making a big deal over nothing. It’s not like someone was going to buy a PS3 but then decided to buy some tires because there was a chance they could win a Wii. I even read that his exclusivity contract expired a few days before the ad aired.
@QOTW: This fall I only plan to buy Assassin’s Creed III, so that I can save up some money for the Wii U. It is at the top of my list because I know for sure that I will enjoy it, especially now that it’s finally changed to another setting.
P.S. I would love to hear that Doctor Who podcast some time soon. If any of you haven’t seen it, here’s the brilliant unshot scene that would have been perfect in the last episode: http://www.youtube.com/watch?v=XWU6XL9xI4k
@Sony and Kevin Butler
Never heard of the guy. Only seen him once during the E3. They didn’t market him outside US. Fully agree with DynamicJul. Much Ado about Nothing. Sony’s lawyers just want a thicker pay check this Christmas.
@Warcraftopocalyps
I wish I was there. That’s what I love about MMOs. Sometimes stuff like that happens. Before it died, Face of Mankind was like that every day. Something bonkers would happen all the time. To bad that Blizzard will probably find the guys, fine them $1 million and get them imprisoned in Guatanamo.
@AI cheating
I had far to many experiences with this. The eternal bane of shooters was making the AI super accurate. In RTS they would hammer you with endless waves of enemies. Takes out all the fun out of challenging yourself. Left4Dead is a primary example. On expert the AI flaunt all the rules in an attempt to rape you into dust. It’s frustrating but ridiculously satisfying if you succeed.
@Gameboy Micro
Here is the reason why it didn’t sell. The day I went out to buy a Micro I instead ended up buying a pre-owned DS with a game for less cash. And it could play GBA games as well. What was the point releasing a Micro after DS anyway?
o hai, i’m sorry, i could not post last podcast. i always post when i can :3
to begin my feedback i’d like to apologize to Shawn on last podcast’s giveaway on choosing the same game as him (half life). if i had seen that i’d have choosen crash bandicoot 3.
@jonah calling me drunk on 281st podcast
1st: i did not meant “‘real time’ reviews” as in real time real time, it was a way for me to say “more often reviews for games that get patched often”.
AND I ONLY GIVE FEEDBACK WHILE DRUNK SOMETIMES >=] (not now, not then)
@Resident Evil 6 on-disc DLC unlocked by modders:
i bet if were not for the Street fighter X tekken “agreement” that capcom made with the consumers after the on disk DLC was discovered, this would not be a free one.
@QOTW:
idk, i’m saving money to see if medal of honor: warfighter is worth of my hard drive space. and if dishonored is as good as it looks, i’ll buy it on the winter steam sale. what about CoD:BO2 you ask? nope.avi
@QOTW
Just bought the new Pokemon. But I don’t think they count as anything major these days. Getting my mits on Halo 4. That’s my target. Hope 343 industries don’t muck it up. Planning to import a Wii U. Straight from Japan. To play all those Japanese Wii titles I missed. And just try to imagine Assasins Creed 3 in Japanese.